Department of Veterans Affairs (VA) require as little as 3.5% down - or no down payment at all. Department of Agriculture (FDA), and the U.S. Less money up front also allows you to save for home maintenance and repairs.Ĭertain loan programs from the Federal Housing Administration (FHA), the U.S. If you wait several years to save a 20% down payment, you may be priced out of homes you could previously afford. Providing a small down payment permits you to buy a home sooner. In 2020, the median down payment was 12% for all buyers, according to a study from the National Association of REALTORS(NAR).įirst-time buyers put down 7%, and repeat buyers put down 16%.Īssumes 3% fixed-rate interest on a 30-year loan and no monthly debt. Yet many home buyers still opt for a smaller down payment. Price each year, and you'll pay it monthly until you have at least 20% equity. Put down less than that, and you'll likely have to pay private mortgage insurance (PMI), which protects the lender if you default on your loan. Traditionally, a standard down payment is 20% of the purchase price. That results in lower payments each month. The more money you put down up front, the less you have to finance. The size of your down payment has a big impact on what you can afford. »READ: The Top 10 Cheapest States to Buy a House in 2021 □ The farther north, east, and west you go, the more expensive it is to buy a home. If you make $48,000 a year, that's only 15% of your gross monthly income - well below the recommended 28%. The cheapest places to live are generally in the South and Midwest.įor example, in Arkansas, the average home value is roughly $147,000 with an estimated monthly mortgage payment of about $600. But there are pockets of the country where it's still very affordable to buy a home. experienced a seller's market characterized by fierce demand for a low number of homes, sending prices soaring. How much house you can afford will largely depend on where you live. Before starting the home-buying journey, crunch the numbers to know what's in your budget. Lenders use this 28/36 rule to determine how much you can safely borrow. According to these calculations, you shouldn't spend more than $1,120 on a mortgage payment or more than $1,440 on your total debt each month.
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